This document discusses GST (Goods and Services Tax) in Australia and the Business Activity Statement (BAS). It provides the following key points: 1. GST is a 10% tax on most goods and services in Australia that replaced sales taxes on July 1, 2000. The BAS is a form businesses file with the ATO to report GST obligations and payments. 2. The BAS is used to report GST, wine tax, luxury car tax, and Pay As You Go (PAYG) withholding amounts from payments similar to TDS in India. Businesses can choose to lodge BAS forms quarterly or monthly depending on annual turnover. 3. Accounting for GST involves credit

1. GST & BAS
By – Bhargav Kejkar

2. Introduction
• Introduced on 1st July 2000 and replaced sales
tax.
• Under the current tax system in Australia
specific good & services have a tax levied on
them at 10%.
• One of the most important things to
remember is that GST is not tax deductible.

3. GST Free Goods
• Health and Medical care.
• Educational supplies.
• Fresh food and beverages.
• Cars for disable people etc.

4. BAS
A Business Activity Statement is a form that is lodged
with the Australian Taxation Office (ATO) that reports
a client’s obligations and entitlements relating to:
• GST (similar to VAT)
• Wine equalization tax
• Luxury car tax
• Pay As You Go (PAYG) amounts withheld from payments (similar to
TDS)
• PAYG installments
• Fringe benefits tax installments

5. LODGEMENT OF BUSINESS ACTIVITY
STATEMENT
• If annual turnover < $ 20 million, entity can choose to lodge
BAS either quarterly or monthly.
• Quarterly tax periods are
July 1st - September 30th
Oct 1st - Dec 31st
Jan 1st - March 31st
April 1st - June 30th

6. Accounting For GST
• On Cash Basis – on receipt basis , when
– Annual turnover < = $1 Million
– Accounting for Income tax on receipt basis
– Charitable institution, a trustee of charitable fund or a gift
deductible entity
• On Non - Cash Basis – on Accrual Basis, when
– Any consideration is received or Paid
– Any invoice (a document notifying an obligation for
payment) is issued by supplier or issued to purchaser

7. Accounting for GST
• GST on income (Credit in Balance Sheet)
(always PAYABLE)
= GST on sales
= GST payable control account
= GST Collected
• GST on expenses (Debit in Balance Sheet)
(always RECEIVABLE)
= GST on sales
= Input tax credit account
= GST Paid
• Net GST = GST on income – GST on expense

8. • GST Payable / Refundable
– GST on sales > GST on Purchases = GST Payable
(Net credit)
– GST on sales < GST on Purchases = GST refundable
(Net debit)
– Transferred to GST Clearing for Clearing Purpose

9. Accounting treatment for GST
• While dealing with GST a/cs, we usually have to
face following a/cs
(a) Input Tax Credit Control A/c
(b) GST output control a/c
(c) GST Clearing a/c
(d) BAS payable
(e) GST output tax credit adjustment a/c etc.
• GST Clearing a/c consist of all quarterly GST
payments / receipts.
• BAS payable shows last year’s last quarter’s
liability.

10. • Firstly we transfer GST clearing a/c balance to
suspense a/c.
• Then, GST on sales and GST on purchase trf to
GST clearing a/c. GST clearing a/c will show net
GST.
• We check detailed ledger for how these
quarterly payments or receipts had been made.
• After which we pass entries of those payments.

11. Entries are shown below….
1. Last year BAS cleared.
BAS Payable a/c Dr
To Suspense a/c
2. Current year BAS cleared
GST Clearing a/c Dr
To Suspense a/c
3. Create current year’s last quarter liability
GST Clearing a/c Dr
To BAS Payable a/c

12. Making ATO Payments/Refunds for C.Y.
• GST Clearing Account
– All the ATO (GST) Payments or refunds relating to 3 quarters (Sep, Dec,
March) are transferred to GST Clearing Account
• PAYG W/H Payable Account
– All the ATO (PAYG W/H) payments are transferred to Debit of PAYG W/H
Liability Account
• Net Wages Account
– All the ATO (PAYG W/H) payments are transferred to Debit of Wages to make
it Gross, as clients in Australia are allowed to Claim PAYG W/H as a direct
deduction
• Fuel tax Credit Account
– All the ATO (Fuel Tax credit) refunds are transferred to P & L credit as Diesel
Fuel Rebate
• PAYG Installments
– All the ATO(IAS) payments are transferred to Debit of Equity section of
Balance Sheet as PAYG tax Installments

13. Example
• Practice Job 2

14. THANK YOU